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Europe's demographic time bomb
Topic: Europe's demographic time bomb (Read 1366 times)
Europe's demographic time bomb
December 27, 2006, 07:34:38 AM »
It's questionable if laws are able to revert a social trend. It depends on the causes for the demographic decline. Will another welfare law be able to inspire german women to have more babies or is it just another loop in the downward spiral?
SPIEGEL ONLINE - December 22, 2006, 07:21 PM
By David Gordon Smith
For expectant parents in Germany whose babies are due at the end of the year, this is a tense time. A new law will make a difference of tens of thousands of euros for parents depending whether their babies are born before or after Jan. 1, 2007 -- with the result that many are seeking ways to delay the birth.
The German birth rate is already low enough as it is, but there will be even fewer babies than normal born on this Dec. 31. The chances of a baby being born will fall rapidly as midnight approaches.
That may sound a little strange, given that nature and not humans decides when babies are going to come into the world. Then again, new laws can have surprising effects on nature.
Parents of babies born in Germany on or after Jan. 1 will benefit from generous new federal family subsidies. Whether little Hans is born at 11.59 p.m. on December 31 or 00:01 a.m. on January 1 could make a difference of tens of thousands of euros to the happy (or not so happy) parents.
"From Christmas onwards, I will be standing on my head," expecting mother Antje Grimm (not her real name) told the German news agency DDP. Grimm is one of many parents swapping tips on keeping Junior inside long enough to see in the New Year and cash in on the family subsidies bonanza.
Under the new Elterngeld, or "parents money" law, parents who stay home to look after the new-born child will receive 67 percent of their last net income tax-free, or up to €1,800 ($2,380) a month, for the first 12, or in some cases 14, months after the birth. The already affluent, in particular, will be significantly better off. Currently, parents whose annual net income lies below a certain level -- €30,000 ($39,600) per couple -- can choose between up to 24 monthly payments of up to €300 or 12 monthly payments of up to €450.
Critics have noted that while the subsidies will be a boon for many families, they will also put the unemployed at a disadvantage for having children. Under the new scheme, the jobless may only get €300 a month for up to 14 months.
Demographic time bomb
But the motivation behind the plan to get Germans reproducing is based on sheer pragmatism: The German birth rate has fallen to an average of 1.3 children per woman -- far lower than the 2.1 child per family replacement rate needed in industrialized countries. The Federal Statistical Office has ominously forecasted a drop in the population from today's 82 million people to just 69 million by 2050 -- a decline it warned "cannot be halted."
That kind of demographic implosion would spell disaster for the country's creaking pension system, which is based on a so-called "contract between the generations." Under the scheme, contributions from the current working population finance pension payments for those who have already retired. "With fewer people paying into the system, it comes up against its limits," explained Hanno Schaifer, a spokesman for the Federal Ministry for the Family. The shrinking population could also result in a shortage of skilled workers and lack of innovation, he says.
German lawmakers hope the legislation can help reverse that trend. "The aim of the law is to support the family and make it easier for parents to afford to have children," said Schaifer. He emphasizes that Elterngeld by itself is not enough to ensure that Germans will have more kids. "It's part of an overall plan that includes other measures, such as improving child care and providing tax breaks for child care," he says.
Practical tips for keeping Junior inside
Though the law may help in the long-run, it has expectant mothers in their last days of pregancy feeling a bit anxious. In recent weeks, soon-to-be parents have inundated doctors, midwives and the Internet for advice on how to prolong pregnancy to ensure their ability to cash in.
"A number of parents have asked us if it is possible to delay the birth without harming the child," said Dr. Christian Albring, president of Germany's Professional Association of Gynecologists. "But we as gynecologists have said that's not an option, from both a medical and ethical perspective. Doctors across Germany are going to refuse to carry out such nonsense."
Andrea Bolz, managing director of the German Association of Freelance Midwives agreed. "We say you cannot delay a birth, which is a natural event. We argue very strongly that you should not intervene unless the health of the mother or baby is in danger. None of us would interfere with a birth just because of some cut-off date."
But Albring offers some more practical advice. "It's good for the woman to have peace and quiet if she doesn't want to go into labor ahead of schedule," he said. " So she shouldn't be afraid of the birth, and she should keep calm over Christmas, which is obviously a time when there's a lot going on."
Other, ahem, distractions should also be avoided. Couples should avoid sexual intercourse near the due date if they do not want an early baby, Albring advised. He explained that a substance called prostaglandin is applied to the cervix by doctors to bring on labor if a baby is overdue. The compound is also found in sperm, meaning that sex in the late stages of pregnancy can also trigger an early birth. "If you don't want the baby to come early, then you have to avoid that kind of thing," Albring explained.
Albring suggests other no-go zones in order to prevent the danger of inadvertently bringing on the birth. "Sometimes when people are having sexual intercourse or enjoying foreplay, they kiss each other, or kiss nipples or the stomach and so on," he explained. "All of this can induce labor."
And even seemingly innocuous pre-birth preparations could lead to a loss of Elterngeld. "Some women give themselves nipple massages or rub a rough sea-salt sponge over the nipples to prepare them for breastfeeding," Albring explained. "The idea is to make them harder and more resistant so they do not get sore when the baby sucks on them." This too, should be avoided, he said.
Happy New Year
But if Mohammed won't go to the mountain, then perhaps the mountain will come to Mohammed. After all, what ultimately counts for the bureaucrats is the time on the birth certificate. But Albring is adamant that gynecologists will not be tempted to add a few minutes to birth times to push baby into the financially lucrative future. "I don't believe doctors will falsify the time," he said. "We are trained to record the birth of a child accurate to the minute." Besides, witnesses are also included in birth records and all could be prosecuted if caught.
But what if the birth took place at home, which is the case for around 2 percent of births in Germany? "Theoretically it is imaginable," he admitted. "But home births have far more risks than hospital births. I don't believe a mother would take that risk just to qualify for the new payments."
Andrea Bolz of the German Association of Freelance Midwives is confident that midwives would not be tempted to stretch the truth. "I assume that midwives will carry out their work correctly, irrespective of whether some kind of cut-off date is pending or not," she said with conviction.
Regardless whether expectant parents have their child on Dec. 31 or Jan. 1, Albring for one thinks the new law will lead to more people having children. "I think it's a good start to make having children more palatable to people," he said. "The average age of a German woman having her first baby is 30. People want financial security. They want to get their career going, build a house or buy a flat, and then have a baby. When people realize that the support from the state has gotten a lot better, I can imagine that will lead to women wanting to have babies earlier, and more often."
"En un lugar de la Mancha, de cuyo nombre no quiero
acordarme, no ha mucho tiempo que viv?a un hidalgo de los de
lanza en astillero, adarga antigua, roc?n flaco y galgo corredor."
Greece is fuct and Arianna Huffington is an economic illiterate
Reply #1 on:
May 13, 2012, 10:46:47 AM »
Yes, Arianna, We Have No Bananas
Posted By David P. Goldman On May 13, 2012 @ 6:20 am In Uncategorized | 2 Comments
Arianna Huffington, a liberal media prima donna and Internet purveyor of celebrity gossip, offers the silliest advice we have heard so far to the beleaguered people of Greece in today’s New York Times. Her missive sets a new high water mark for liberal stupidity, both for the author, and for the newspaper that chose to print it.
Greece should default on its foreign debt, she avers, like Argentina:
Argentina, which defaulted and restructured beginning in 2001, offers a point of comparison. The austerity crowd warned that Argentina would collapse if it stopped pegging the peso to the dollar and defaulted on its debt. There are many differences between Argentina and Greece. But Argentina’s default was followed by a few short months of economic crisis and then many years of steady economic growth — a dramatically different direction than the one Greece is now taking toward a potentially endless path of contraction that is destroying millions of lives and crippling the indomitable Greek spirit.
The trouble is that Greece is another banana republic without bananas. Argentina is a commodity exporter that won the lottery when commodity prices soared. In 2010 the country exported $68 billion worth of goods, mainly food, oil and metals, and imported $56 billion, with a trade surplus at about 3% of GDP. If you have a trade surplus, you don’t need the international lending market. You can pay cash.
Greece, by contrast, had a trade deficit in 2010 of $22 billion, equal to 7% of GDP. In 2011, both the deficit and GDP shrank, and the deficit remained at 6% of GDP. If Greece defaults, it will be unable to borrow the 6% of GDP it requires to finance this deficit, and it will be reduced to cash-and-carry trade–which means that it will cut imports by the equivalent of 6% of GDP. It appears that arithmetic wasn’t on the syllabus when Mrs. Huffington went up to Cambridge.
Her encomium begins with a sentimental portrait of her self-sacrificing mother, and concludes:
Greece, like my mother, has always been devoted above all else to its children. When the future of those children is diminished, the future — and life — of the country will be diminished, too.
If only the Greeks still troubled to have children, Mrs. Huffington’s sentiments would have more resonance. Greek fertility (number of children per female) fell to only 1.28 in 2005, the rock bottom of the European pile.
Period Total fertility
Source: United Nations
The unfortunate Greeks, as it turns out, were not selling their jewelry to send their children to school, as Mrs. Huffington claims her mother did; in fact, they weren’t having many children at all. They were borrowing wildly from the rest of the world to live the good life. The average Greek owns six properties due to emigration and depopulation, because whoever is left inherited whatever there was to inherit. A large part of the population lives by renting or selling these properties to tourists (for payment in cash, or wire transfer to Lichtenstein). Taxi drivers take three-month vacations. A third of the economy is off the books. Corruption is endemic.
Greece well may default on its debt; the parties that favor cooperating with the European Community’s bailout-and-austerity plan did not get enough votes to form a government in last week’s election, and its political system presently is in chaos. If Greece does default, the result will be a vastly devalued currency, and a massive reduction of wealth for all Greeks. When Greek land and labor have become cheap enough, money will flow back in and pick up the bargains. And the Greeks will endure an economic dark age, a horrible example for feckless and spendthrift countries. Talented and educated Greeks (like Mrs. Huffington) will emigrate, and adverse selection will leave a rump population to gnaw on the bare bone of resentment. Infertility will hollow out the remaining population, and eventually turn Greece into a beachhead for impecunious North Africans seeking entry into Europe. At present fertility, the working-age population of Greece will fall by half over the present century.
If America is foolish enough to return politicians of Mrs. Huffington’s ilk in November, something similar will happen to us.
Article printed from Spengler:
Re: Europe's demographic time bomb
Reply #2 on:
April 14, 2013, 01:06:26 PM »
Why is Europe committing demographic suicide?
Carolyn Moynihan | 11 April 2013
Everybody knows about the economic woes of Europe. In the media you cannot get away from it. What we seldom hear about is a problem that puts debt crises and austerity riots in the shade: the region’s demographic suicide. Europeans, on the whole, are not having enough babies to replace themselves -- a trend which threatens the workforce, support of the aged and even the continued existence of some nations. It is a problem that goes back well before the recent housing bubbles and busts, bank failures and bailouts. It is probably a cause of the latter.
Yet it is a mystery to the people we rely to predict such things. Demographers, economists and psychologists are scratching their heads over a phenomenon that breaks all their statistical models and paradigms of human behaviour. Why would people who are prosperous (and, despite the current situation, western Europe is) not want to do what human beings have always done and leave a posterity? How can they contemplate the eclipse of their nation?
One answer might be that the public is simply not aware of what is happening. Lant Pritchett, an economist and Professor of the Practice of International Development at the Kennedy School of Government at Harvard University, toldMercatorNet: “Scientists of perception study ‘change blindness’ and can show people have a hard time even visually seeing gradual change, much less gradual change at the social level. Unlike the advocates for climate change there are no ‘extreme events’ like Hurricane Sandy in demography so it is hard to get attention onto the inevitable consequences of current fertility.”
Dr Pritchett and colleague Martina Viarengo are the authors of an essay, “Why Demographic Suicide? The Puzzles of European Fertility”, which is part of a collection of essays published recently by the New York based Population Council in honour of a sistinguished scholar, Paul Demeny. The papers are heavy going but repay the effort to grasp what population experts are saying right now.
This is certainly the case with “Demographic Suicide…”, which states clearly the seriousness of persistent low fertility and the fact that the usual experts simply do not know how to account for it, let alone come up with a remedy. The authors speak of below replacement fertility (BRF) as “a revolution in human affairs”, a “paradigm-shattering phenomenon”. They are not exaggerating. They end by posing the “big open question of how children fit into an overall pattern of ‘family’ in the post modern era.”
“Replacement” as the goal of population policy
Sixty years ago the question was completely different. Influential people like the founder of the Population Council, John D. Rockefeller III, were worried about population growth in the developing world resulting from the fall in death rates (thanks to better health care) and continuing high fertility. They thought that people could not have good quality lives with so many mouths to feed. The fact that former colonies of Europe were becoming independent and you never knew what they might do politically added to First World jitters. Nothing but a concerted effort to stabilise population would do. Demographers did their projections and “replacement fertility” (2.1 children per woman) became their holy grail.
With backing from the UN and the cooperation of Third World governments the “war against population” (as economist Jacqueline Kasun has called it) was launched. The contraceptive pill was rapidly deployed with government subsidies. Abortion became a reproductive right. These methods had their strongest effect in the rich countries, where fertility had been in decline anyway but was boosted by the post-war baby boom. Developing countries took to draconian methods such as sterilisation campaigns in India and the one-child policies in China. Economic development, education and health care also contributed to lower birth rates.
Globally, the goal of replacement level fertility is now within reach. According to the UN’s medium estimate the average woman today will have 2.36 children – down from 4.95 in the early 1950s. New research suggests the 2.1 mark will be reached by around 2050. The trouble is that, while some countries will still be above that magical figure, some will be well below. Furthermore, there is no guarantee that even globally population will stabilise; decline is more probable. Already half the world’s nations, including many of the less developed, have total fertility rates (TFR) below replacement.
Some of the lowest rates in the world are in East Asia, but among the 27 countries of the Europe Union not one currently has a TFR of 2.1 or more, although Ireland, Iceland, Turkey and perhaps France are around 2, and the UK and the Nordic countries have rates between 1.87 and 1.98. At least a dozen EU countries are under 1.5; Spain and Germany are on 1.36 and Italy 1.41 (2010-2011 figures).
Behind these figures are the decisions of women and men shaped not by the imperatives of evolution or the rationales of economics – let alone the assumptions of demographers -- but by factors that experts in those fields are not even equipped to understand.
Demography, as Pritchett and Viarengo point out, is a descriptive discipline and cannot make predictions without a behavioural theory to go with them – which is did not have when its practitioners assumed that fertility would magically stabilise at replacement.
Evolutionary psychology, a popular source of behavioural theory, might (might) tell us what humans will do about procreation in the context of limited resources (have fewer but better quality offspring), but it seems quite useless to explain why people whose wealth and social status are increasing would stop having children. “BRF in Europe seems a paradigm-shattering phenomenon for evolutionary psychology,” Pritchett and Viarengo note.
The economic model
That leaves economics, Pritchett’s own discipline and one that he admits is also at a loss to fully account for persistent low fertility. “The joke about economists is that they are people with a head for numbers that lack the personality to be actuaries,” he told us in an email.
We had asked what could motivate nations to turn this problem around. He said: “I am pretty good with numbers but not only do I not know the answer to this question, being a new phenomenon, we have yet to discover numbers and data from experiences of turning it around so I don't know even what to do to begin answering this question: that is why the piece was titled ‘puzzles’ not ‘answers’."
All the same, economics has a lot to say about procreation and most of it is a little bit shocking to the layperson who comes across it for the first time. Roughly it goes like this.
Children are “complex capital goods” in whom parents invest with the expectation of a return, or “child services”. These services can be produced by a large number of low quality children or a small number of high quality children. In conditions of rising income people want fewer but higher quality children, investing more in their education and so on. This drives up the price of a child -- together with an opportunity cost in the form of the time it takes to consume the services (pleasure or satisfaction) a child produces -- compared with other goods, such as a summer holidays or a better house.
The trouble with this type of behaviour is that children can be priced off the market completely – and perhaps unintentionally – because once you get down to one child the next step is not a “little bit” of high quality child, but none at all; not a gradual change but a “massive discontinuous drop in the demand for child services,” as Pritchett and Viarengo put it. This can be seen in rates of childlessness in a few European countries at or approaching 20 percent among women aged 45. (There are sub-regional differences which are interesting and worth looking up in the essay.)
Clearly, childlessness is the biggest challenge for population theorists. What might people be choosing instead of a child? Pritchett and Viarengo look at possible substitutes for the “little hedonic bundle” that a baby represents and find two likely candidates.
The first is social security for the aged, which replaces the support aged parents once expected from their children – something that is unsustainable, though, in conditions of population decline. The second is the market work that women have embraced and that may return them more meaning and status than motherhood has done up until now.
When it comes to a substitute for the love and intimacy that having children provides in traditional family life, however, the authors of “Demographic suicide” are stumped.
They note that “sexual activity, childbearing and marriage have become disconnected so that increasingly it is socially acceptable to have one without either of the other two,” particularly in northern and western Europe. But: “It is not at all obvious to us what is going on with the ‘demand for intimacy’.” While in some countries people continue to have children without getting married, and in others to marry but have very few children, there are signs (in Finland, for example) that marriage and fertility – especially through an increase in childlessness – are declining together.
“What is substituting in the lives of women and men for the love and intimacy that came from parent–child relationships? It is certainly not a significant increase in marital love and intimacy without children substituting for less marital love and intimacy with children—particularly in countries where marriage and long-term cohabitation have declined.”
One answer to this question might be “same-sex relationships”. But even where children are added to these partnerships by technical means they can hardly solve the social problem of low fertility. And even if they are regarded as married that is not going to boost the birth rate.
Yet marriage, properly defined, does seem to be the answer – the only one we know from long experience -- to the demand both for intimacy and for enough children to give the human race a future. Pronatalist policies such as baby bonuses, paid parental leave and gender equity in the workplace appear to have made some difference to the birth rate in countries where they have been introduced, but there are human motivations that such incentives do not touch – things like till-death-us-do-part commitment to a spouse and the willingness to sacrifice easier pleasures for the joy of seeing mutual love bear fruit in the form of a child.
The question, finally, is what can foster such motivations. In the past it was religious faith. Is there any substitute for that?
Carolyn Moynihan is deputy editor of MercatorNet.
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